BOT operators of VPT bat for policy reforms

Visakhapatnam: THE BOT operators of Visakhapatnam Port Trust (VPT) have made a strong pitch for initiating immediate reforms in the port sector.

They have represented to the Union Minister for Ports, Shipping and Roadways SarbanandaSonowal, they sought effective utilisation of port infrastructure. Without suitable policy reforms, these BOT operators will not be a part of the growth path of VPT by effectively utilising the port infrastructure and are on the verge of becoming non-performing assets. The operators also articulated their problems before Minister of State Shantanu Thakur during his visit to Visakhapatnam a few days ago.

At VPT, one among three top major ports in the country, three concession agreements signed namely with Adani's Steam Coal Handling Terminal of 6.5 MTPA capacity, SEW's steam coal handling facility of 7.5 MTPA capacity and Alba's Cargo handling facility of Alba 6 MTPA capacity with total investment of approximately Rs2,500 crore have run into rough weather due to variety of reasons, sources told Bizz Buzz. The BOT operators told the ministers that lack of supporting policies from VPT and Shipping Ministry are responsible for the stalemate. Further, six concessionaires are also struggling due to various constraints in the concession agreement which is forcing them to fight with VPT through disputes/arbitration on various matters.

VPT is presently performing below par with a Compounded Annual Growth Rate (CAGR) of 0.7 per cent whereas Gangavaram Port Limited (GPL) in Vishakhapatnam is growing with a CAGR of 10.5 per cent. This is primarily because GPL is not governed by Tariff Authority for Major Ports (TAMP) regulations and is adopting aggressive marketing strategies, faster turnaround time, competitive pricing, offering attractive discounts to end users and has put restrictions on handling trader's vessels to become monopolistic.

In VPT, PPP projects like Essar Vizag Terminal Limited, Vizag Seaport Ports Ltd and Vizag General Cargo Berth Private Limited have been hit by aggressive pricing by GPL. Visakha Container Terminal Private Limitedis apprehending diversion of some of its volume to GPL's container terminal which is reportedly under construction and planning to commence operations in the first quarter of next financial year.

GPL being private port and not regulated under Shipping Ministry is taking strategic decisions and ensuring immediate implementation for business growth, whereas VPT is reading "rule book" as mentioned in concession agreement and not finding immediate solution for the problem which has evidenced cargo migration to GPL and steep increase in volumes of GPL for last 10 years, a BOT operator said.

In the past decade, the Centre has invited private investment into the major port sector and several projects were awarded under Design, Build, Finance, Operate & Transfer (DBFOT) basis across the major ports in the country.